On Competitive Advantages

I just stumbled across a fantastic series on bad startup pitches from Jason Cohen’s blog. It’s titled “5 lessons from 150 startup pitches“. I find myself agreeing violently with 3 of the 4 points that relate to competitive advantage.

I had a recent conversation with a friend who is working on a pitch for a new venture. The product concept is a good idea, but the way it is currently presented, it veers dangerously close to the offerings from a couple of competitors. When I asked what the competitive advantage was, the answer was quite diffuse: “we have Feature X, that’s our differentiator.” “Our UI is so much better than theirs it will blow them out of the water.”

It gets worse: “Company X is charging $Y for a substantially similar service. We are going to come out of the starting gate charging 50% what they charge.” At some point I will write a post on what not to do in pricing strategy – but that’s a conversation for another day.

So what qualifies as valid competitive advantages? Here are some candidates.

First mover advantage – you are the first to solve this particular problem in this particular way. (This could work for and against a business though. It’s much easier to launch a product into an existing category than to make your own product category.)

Deep knowledge about your target market’s needs and wants, enabling you to build something that solves their problems better than the competition has solved their problems.

Special soup technology nobody can easily copy, even if they hire away your chief engineer or read and understand all of your published patent applications.

Deep relationships with big fish at key potential customers (if B2B) that gives you a big head start on business development.

A team with domain expertise that can execute at twice the speed of their competitor’s team.

What are some competitive advantages you have enjoyed in your experience?